Expedia to power Travelocity's sites, shares +0.9% AH

|By:, SA News Editor

Expedia (EXPE) has reached a long-term deal with Travelocity (owned by private travel giant Sabre Holdings) to "power the technology platforms" for Travelocity's U.S. and Canadian sites, as well as to provide its travel inventory and handle customer services. The deal is expected to go live in 2014.

In an 8-K, Expedia discloses Travelocity will be paid affiliate marketing fees for Expedia bookings made through its sites, and that Expedia could have the right to buy certain Travelocity assets down the line.

Sabre asserts Travelocity is the #2 online travel agency in the U.S., and the #6 U.S. travel agency overall.

"It’s a virtual merger," says travel analyst Henry Harteveldt. "It’s as if Costco said it would source everything from Walmart and use Walmart’s ordering system and inventory management system and everything else."

The deal stands to give Expedia more scale as it continues battling with archrival Priceline (PCLN) in a very competitive North American travel bookings market.